As the financial meltdown affected the global economy, including India, the last quarter of the financial year 2008-09 witnessed high volatility in the domestic gilts market.
A series of policy decisions by the Reserve Bank of India resulted in enhancement of liquidity in January, but the large borrowing programme of the central government pushed up rates.
December 2008 saw the measures taken by the government and the central bank leading to the release of adequate liquidity into the system and a decline in short-term rates.
